MetLife may pay AIG in stock, cash for unit: source

A statue stands atop Grand Central Station in front of the MetLife building in New York in this October 8, 2008 file photo.

NEW YORK (Reuters) - MetLife Inc (MET.N) plans to pay American International Group Inc (AIG.N) in stock and cash for American Life Insurance Co (Alico), as the two sides negotiate what could be a roughly $15 billion deal, a source familiar with the matter said on Tuesday.

MetLife, the largest publicly traded U.S. life insurer, may pay roughly $8 billion of the purchase price in stock and the rest in cash, according to the source.

Banks including JPMorgan Chase & Co (JPM.N), Bank of America Corp (BAC.N), Deutsche Bank AG (DBKGn.DE) and Credit Suisse Group AG (CSGN.VX) may give MetLife a $5 billion bridge loan for the deal, according to Bloomberg, which first reported the news.

A deal could be struck as soon as February 11, Bloomberg said.

The terms of any deal had not been finalized, though, and the mix could change, the source said.

MetLife spokesman Christopher Breslin and AIG spokesman Mark Herr declined to comment. The banks could either not be reached immediately or declined comment. The source is anonymous because the talks are not public.

Alico, which was founded in 1921 and is based in Wilmington, Delaware, sells life insurance and retirement products to 19 million customers in 54 countries.

Its sale would be the largest for AIG since its September 2008 bailout, and a transformational deal for MetLife, expanding its presence in fast-growing international markets.

Still, a large stock component to the purchase price would add complications around how AIG pays back U.S. taxpayers, who have pledged a total of $182.3 billion to support the insurer.

The insurer has put Alico and American International Assurance, another life insurance business, in special purpose vehicles, and given the New York Federal Reserve a preferred stake in them. The Fed's interest in the Alico vehicle is worth $9 billion, while that in AIA is worth $16 billion.

The possibility for the Fed to accept stock as repayment adds a level of complexity but may not be a dealbreaker, said Clark Troy, a senior analyst at Aite group.

AIG has announced some two dozen deals to sell assets for more than $11.9 billion so far, as part of its efforts to pay back taxpayers. It remains tens of billions of dollars away from paying off Uncle Sam.

Robert Benmosche, who took over as AIG's chief executive last summer, has slowed the divestment process and pulled some auctions as he tries to rebuild the insurer's businesses.

In a recent interview, he told employees he envisions a smaller AIG in the future, with global property-casualty and U.S. life and annuity operations at its core.

Under the terms of his contract, Benmosche, a former MetLife chief executive and current shareholder, cannot be involved in AIG's discussions to sell Alico to his former employer.

Last week, MetLife confirmed it was in talks to buy Alico but hadn't reached a deal.

There is "no certainty" MetLife will reach a deal for the AIG unit, Chief Executive Robert Henrikson said on a conference call last Wednesday, adding the insurer does not need an acquisition to meet its business objectives.

Management added on the call the company would not sell any current businesses to finance a possible deal, nor would it use capital in an off-shore reinsurance unit toward a deal.

AIG's shares were up 88 cents, or 4 percent, at $23.04, while MetLife was up $1.62, or 4.8 percent, at $35.26, both in afternoon trading on the New York Stock Exchange.

(Reporting by Paritosh Bansal; Editing by Leslie Gevirtz, Bernard Orr)